© Reuters. FILE PHOTO: Bitcoins are seen in this illustration picture taken September 27, 2017. REUTERS/Dado Ruvic/Illustration//File Photo
2/2
NEW YORK (Reuters) – Digital Currency Group was sued on Wednesday by its bankrupt Genesis Global Capital cryptocurrency lending unit, as both sides negotiate DCG’s repayment on more than $610 million of loans that matured in May.
In a complaint filed in Manhattan bankruptcy court, Genesis is seeking to recoup $500 million that DCG borrowed under four loans.
It also filed a separate complaint to recover 4,550 , worth about $117 million, owed by the affiliated Digital Currency Group International under a fifth loan.
Genesis said recovering the unpaid sums would offer a “significant benefit” to its bankruptcy estate, but that DCG is “wrongfully in possession.”
In footnotes, Genesis said it is in talks for “partial repayment” by DCG, and intends to stop pursuing the lawsuits if both sides settle.
According to court papers, DCG owes more than $1.7 billion to Genesis and other debtors.
On Aug. 29, Genesis said it reached an agreement in principle with DCG and unsecured creditors, where to satisfy those obligations DCG would pay $275 million, and take out $1.16 billion of new credit facilities maturing in two or seven years.
In a statement on Wednesday, DCG said it expects to file a settlement with the bankruptcy court soon.
“At that point, we will initiate the distribution of funds and continue on the path to significant recovery for Genesis creditors,” it said.
Genesis filed for Chapter 11 protection from creditors in January, two months after halting withdrawals.
The filing also came after Genesis made large loans to the hedge funds Three Arrows Capital and Alameda Research, which both filed for bankruptcy in 2022.
Alameda’s parent, the cryptocurrency exchange FTX, also filed for Chapter 11.
DCG, whose chief executive is Barry Silbert, has not sought bankruptcy protection. It also owns the crypto news website CoinDesk and digital asset manager Grayscale.
The cases are Genesis Global Capital LLC v. Digital Currency Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 23-ap-01168; and Genesis Global Capital LLC v. DCG International Investments Ltd in the same court, No. 23-ap-01169.
Read the full article here